A Word From the Directors

For those who have been around the property market for a while, you will know that property values move up, down and, at times sideways. We all want to buy low and sell at a peak, however the buyers for our end product factor in other considerations such as cheap money, high liquidity and the luxury of choice. Right now, at best, they are only getting two out of three. Vendors and purchasers alike know by now, that with a significant reduction in planning approvals over the last twelve months, the supply required to meet current demand is just not there. We read with interest an opinion piece published by the AFR (8 June) by columnist Karen Maley titled ‘Property Boom Risks Grow As Buyers Go All In’. Ms. Maley refers to the time honored tradition of awaiting APRA to step in and calm a fervid housing market. Key indicators, such as Melbourne's 5% rise in property prices over the last 12 months, seem tepid when compared with Sydney’s 11.2 % increase during the same period. Darwin, however, is almost that double again at 20.3%! In Victoria the jump in new home lending for the month of April was a substantial 3.7%, a sure indicator that starry eyed young couples are today worrying more about FOMO than COVID.

The question is, of course, do these continuous gains in residential prices allow a developer to charge a consumer more for an off the plan product at any stage of a campaign? Will a project launched, at a higher rate per sqm, still slow the rate of sales thereby increasing your cost per sale and extended days on market? Or can we get back to the good old days where we benchmarked stages of most sale campaigns (namely halfway through a campaign or even at financial close) then trigger an increase in the price of unsold stock? The State Government’s recent initiative to waive full stamp duty for any completed product that has remained empty for twelve months post completion (and who can afford to do that?) obviously has nil impact on completed stock outside the CBD. If you are carrying finished product for a year or more, within the wealth belt of metropolitan Melbourne, then a few thousand dollars designed to incentivise a buyer will make no difference to a developer’s larger issue of profit retention. From 10th of January this year, when Marshall White Projects opened again for business, we have helped, on average, two people per day own an off the plan property at an average sale price of just over $1.13 million. Interestingly, this is only slightly higher than the same period in 2020 at an average of $1.107 million. Yes, it is project dependent but the level of buyer demand across all sections of the market (empty nesters, first homebuyers and investors) only remains on par with last year. So why the difference? Why were we having to conduct over five buyer appointments last year to close out a sale and why has the ratio of appointments to deals improved to one in three so far for 2021? Interest rates are the same, a buyer’s liquidity may have only slightly improved, however our deliberate shift in educating an off the plan buyer before asking them to buy has shown substantial dividends. We all aim for marketing initiatives with cut through, however, eDM’s on sustainability, buyer guarantees, it’s cheaper to buy than rent, why buy new and the benefits of buying off the plan (there’s a distinct difference) educate a buyer – knowledge breeds confidence and confidence leads to action. PS If you ever see an eDM from us with the banner of “Developer Says Sell” then you know we’ve jumped the shark! If you want to prepare buyers to make a decision, then educate them. Provide them with all of the information they need/that’s important to them before asking them to buy. Frequency builds trust. Only then can you ask them to own any off the plan property that you are selling. We’re always happy to hear from new clients who need advice

Mark & Leonard